The Former Corporate Lawyer Who Spun Lies In Multi-Million Dollar Ponzi Scheme

LawFuel.com – Preet Bharara, the United States Attorney for the Southern District of New York, announced that CHARLES A. BENNETT pled guilty in Manhattan federal court today to an Indictment charging him with securities and wire fraud in connection with a scheme to defraud over 30 investors of more than $5 million over the course of more than five years. Among other false and misleading statements, BENNETT lied to investors by claiming to have exclusive access to a highly successful privately held investment fund in which he would purportedly invest the investors’ money.

BENNETT solicited millions of dollars from over 30 investors, including his close friends and family members, but never actually invested any of the money in the investment fund or any other investment vehicle. Instead, BENNETT used the investors’ money for his own personal benefit and to pay back other investors. BENNETT was arrested on December 12, 2014, and pled guilty today before United States District Judge Laura Taylor Swain.

U.S. Attorney Preet Bharara said: “As he admitted today, Charles Bennett spun an elaborate web of lies and ensnared dozens of investors, including his own friends and family. Bennett, a former corporate attorney, solicited millions of dollars from investors, issuing fake promissory notes and account statements, but actually just spent all of the money on his personal expenses. He now awaits sentencing for his fraudulent investment scheme.”

According to the Complaint, the Indictment, and other statements made in open court:

From 2008 through November 2014, BENNETT, a former corporate lawyer at a law firm based in New York City, engaged in a multimillion-dollar Ponzi scheme, during which he solicited money from investors based on materially false and misleading representations. Specifically, BENNETT told the investors that he himself had invested money in a highly successful privately held investment fund, and that, should they choose to invest, the investors’ money would be held in BENNETT’s account. BENNETT communicated by email and telephone with many of the investors in order to tell them about the purported status of their investments, including their purported returns. BENNETT also led most of the investors to believe that they were the only individuals to whom he had extended the offer to invest with him.

BENNETT created false and misleading paperwork in furtherance of the scheme, including “promissory notes” that he provided to the investors as a record of the amounts of money they had given to BENNETT to invest. BENNETT also provided certain investors with account statements that purported to show the amount that BENNETT (and the investors, through BENNETT) had invested. In fact, BENNETT never invested any of the investors’ money in the investment fund or in any other investment vehicle, but instead spent the money on his own personal expenses and to repay other investors.

During the course of the fraudulent scheme, BENNETT solicited more than $5 million from more than 30 investors.

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BENNETT, 57, formerly of Manhattan, now living in Minnesota, pled guilty to one count of securities fraud and one count of wire fraud. The securities fraud count and the wire fraud count each carry a maximum sentence of 20 years in prison; and the charges carry a maximum fine of $5 million, or twice the gross gain or loss from the offense. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. BENNETT is scheduled to be sentenced by Judge Swain onMarch 17, 2016.

Mr. Bharara praised the work of the Federal Bureau of Investigation and thanked the Securities and Exchange Commission for their assistance with the investigation.

The case was brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Amy Lester is in charge of the prosecution.